Contrary to popular belief

The world we live in is decidedly not a zero-sum game. Yet, if you were to listen to the President and his supporters or the hard left of the Democratic Party, you would be forgiven for feeling that it might be. Trade and immigration on the one hand benefit society as a whole, but on the other produce losers who come to see the entire issue in zero-sum terms. This zero-sum perspective is closely aligned with 45's personal sense of a constant war of all-against-all. It is a politics in which those who are different must be separated, each with their own “lebensraum,” to reflect the zero-sum nature of the world as seen through their eyes.

Everything with 45 — his equivocating response to the violence in Charlottesville, defense of Confederate Genrals, declarations of culture war, pardoning of perhaps the country’s leading racist xenophobe, threats to shut down the government unless his wall is funded, his Justice Department’s focus on supposed-discrimination against white college applicants, and stepped-up deportation of Latinos — comes down to his deep-seated resentments and insecurities.

It’s too easy — and too conversation-ending — to dismiss it as racism. 45's politics of grievance is targeted at those who feel overwhelmed by an unending litany of alien threats: changing U.S. demographics, Islamic terrorism; shifting cultural and religious mores; the reassertion of a (different) multipolar world after America’s recent moment as sole global superpower; the rise of a post-industrial economy with little need for many of today’s workers and communities; an attendant disintegration of those communities’ economies and social structures; to name but a portion of them. And, it’s not like the hard left doesn’t go after an equally large list of bogeymen.

One could write a lengthy treatise dissecting these phenomena, their inter-relationships and what we might want to do about them. Or one could, as 45 has, simply blame all of it on people different from his base and promise to destroy them in short order. The latter obviously is, sadly, more compelling to a large proportion of the population. Though, one notes, hardly a majority.

The right has long criticized liberals for “identity politics” and promoting a sense of victimization. Yet, since the civil rights movement, conservatives have played the identity card with the same ferocity. While the left can hardly claim to have avoided identity politics, there’s a fundamental difference: Liberals see “rights” as something of a public good (like national defense or a scenic view), whose consumption by one individual doesn’t diminish consumption by others. In fact, they believe that all Americans are thereby made better off. 45’s supporters see the opposite: gains for one group must always come at the expense of another. The classic zero-sum game.

One microcosm that makes crystal clear the inherent nature of our zero-sum outlook is the ongoing kerfuffle around Black Lives Matter. The organization has a clear cut mission: “build local power and to intervene in violence inflicted on Black communities by the state and vigilantes.” For some reason, their detractors feel that the movement should expand its focus to include “black-on-black crime” or recognize that “all lives matter.” For what ever reason the detractors see that by focusing on the issue of unarmed African American people being killed at the hands of the police or vigilantes that this somehow reduces the focus available to competing issues.

In fact, the critics often like to cite what Seattle Seahawks cornerback Richard Sherman said about the Black Lives Matter movement, “I dealt with a best friend getting killed, and it was two 35-year-old black men. There was no police officer involved, there wasn’t anybody else involved, and I didn’t hear anybody shouting ‘black lives matter’ then.” That Richard is an African American is used to justify their position even though paying attention to black on black violence can be accomplished without diminishing the attention to the issues Black Lives Matter brings forth. By way of example, I raise money every year to help fight Atypical Teratoid Rhabdoid Tumor (ATRT), a devastating childhood cancer. When I tell people this, I have never been confronted with the response “all cancers matter.”

Most of us live in an America that has always been great. Yet, we also live in a false dichotomy between those who see a world of limitless possibilities and those who see it as zero-sum. The fact is that, even with a growing pie overall, in a changing world some will see their share shrinking, even in absolute terms.

When I stop and think about the period of my lifetime, my eyes lay gaze on one pathway of America’s road to quasi-perdition. Starting in the 1970s American companies began to move away from the compensation models of the post war period. Starting in the 1980s and skyrocketing in the 1990s to levels that mostly hold today, the ratio of compensation to the CEO relative to the average worker grew out of control.

Source: https://www.epi.org/publication/ceo-compensation-surged-in-2017/

Some will wonder why this is a problem. Others will see it intuitively. My sense is that this is a leading symptom of the problem. One that leads America’s citizens to more easily accept the current zero-sum politics offered up by the populists of both sides (the Sanders wing of the Democratic Party is the double edge of the Alt-Right-45 sword).

If we were to consult equity theory, we would see that it asserts, in general, things are perceived to be fair when the ratio of outcomes to inputs is equal for all participants. I can think of no good leadership principle that would justify the inequity we see in CEO-to-worker compensation ratios at the levels we see today. I can think of some principles like unfettered greed that might have led to this situation, but no sound business principles.

For those who are so tempted to scream “Socialism” whenever they read or hear the word equity, I would be quick to remind you that this isn’t about equality of outcome. This is simply about a predictable effort-to-outcome ratio. For those who can’t see that some communities of color are disproportionately hit hard by our current status-quo are likewise living with their heads in the sand. Basic human decency demands that the effort-to-outcome ratio be fair, and there is no way to make such an assertion today.

If you want to know where the anger is coming from, it is being bred at the top. America’s CEOs and senior managers are slowly but surely killing the golden goose. To make matters worse, the top fund managers at the worlds largest funds (like CalPERS) are doing nothing to rein in the CEOs even though there is plenty of evidence that excessive executive compensation is actually counter productive when it comes to achieve their return goals for their retirees.

Cumulative abnormal returns to the firms that are in the top and bottom deciles of annually ranked excess CEO incentive compensation distribution over 1994–2011 are plotted in event time. Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1572085

So, rather than 45 calling to task his fellow over compensated CEOs, he has taken to blaming the Democrats and Republican Globalists for all those folks who are out of work. 45 doesn’t even come close to addressing the real concerns of Americans across the country: “why is it the system is paying out massive rewards to people who don’t seem to be doing much while I’m working my ass off and getting no where?”

It is their own version of zero-sum math. Some undeserving people are getting wealthy, while they, though no fault of their own are stagnating. It’s pretty clear that you’d have a hard time disputing this. And yet, we still don’t want to have a substantive discussion of these issues. Really, wake the fuck up already America.

When you are creating wealth, like we are, and where the effort-to-outcome equation is seen by all sides of the political spectrums as out of whack, then you are in for a tough ride. The Democratic Party is split roughly in half today based on outdated conceptions — between those who want to go back to the New Deal/Great Society era, and those who only want to roll history back to the 1990s. The Republican Party is split between its traditional elite and 45’s more “populist” alt-right base of deplorables.

In both parties, the elites are way more comfortable with a pluralist and global America. However, the wing nuts are more concerned about their dwindling economic prospects. They seem far more inclined to 20th century-style government intervention, and less concerned about, shall we say, politically-correct social views.

Bernie Sanders’ 2016 campaign, with a Marxian fixation on economics as explanation of all ills, was notably unconcerned with racial and social issues, and his following achieved notoriety for its high concentration of angry young males who might be subjected on most college campuses today to some sort of gender-sensitivity training. The soft racism of the left was visible to even the most casual observer.

For all the Hitler comparisons, 45 is really more reminiscent of Mao. Seething resentment and authoritarianism seems to drive 45 as it did Mao. And, like Mao, 45's most notable personality trait is a constant need to throw everything around him into chaos. Having fractured the Republican Party into its constituent parts and driven a wedge between them, 45, with his unerring sense for disruption, now has embraced the opposition.

It is hardly inconceivable, then, that the two groups of wing nuts and two groups of elites might realign in separate common causes. The wing nuts might unite to advocate a more activist government on behalf of economic have-nots, while the elites manage to find a sort of Silicon Valley Consensus. Just enough government to support public investment in the needs of the new economy and, otherwise, a basically libertarian attitude toward both social issues and tax policy.

In many ways, this feels like where the country has been headed for more than a little while; 45's candidacy was simply the logical next step in this progression. It is also terrifying. All the king’s horses and all the king’s men won’t put these two parties all back together again.

Stephen Chase Honikman I say to you sir: “LMNOP.”

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Alex Horovitz

Alex Horovitz

simplicity drives success

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